Moving from Canada to Alaska: No Income Tax, No State Sales Tax, and a Yearly Dividend Cheque

Alaska is the only state that charges neither a personal income tax nor a statewide sales tax, and it pays its residents an annual dividend from the state's oil wealth. The corridor from Canada runs through BC and the Yukon into Anchorage's oil and gas headquarters, Fairbanks' military and university employers, the North Slope's rotation work, and the fishing and mining sectors. The US side of the move is nearly free of state tax. The Canadian side carries the departure tax, and rotation workers may have a residency question before they have a departure question.

Key takeaways

• Alaska has no personal income tax and no statewide sales tax; some municipalities levy local sales taxes (Anchorage does not).
• Residents who meet the eligibility rules receive the Permanent Fund Dividend each year, which is taxable federally.
• Property tax runs near 1.2% effective in Anchorage.
• No estate tax.
• North Slope rotation workers may meet the substantial presence test before any formal move.

The Canadian departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the day you leave. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 to defer tax on illiquid assets. The rate is your province's: on a $300,000 unrealized gain, roughly $72,000 from Alberta and $80,000 from Ontario, Quebec, or BC. Provincial health coverage ends around your departure date; confirm the exact date with your plan and arrange US coverage to start the same month.

US federal side

Dual-status return in the arrival year, FBAR on Canadian accounts above $10,000 aggregate, Form 8938 above thresholds, and the RRSP treaty deferral federally. The TFSA loses its tax-free status the day you become a US person; close it before crossing. Equity compensation vesting after the move is split by working days between Canada and the US.

Alaska's side

No personal income tax; no statewide sales tax, with local sales taxes in some boroughs (Juneau 5%, Fairbanks none, Anchorage none); property tax near 1.2% effective in Anchorage with a residential exemption; no estate tax. The Permanent Fund Dividend, paid annually to residents who have lived in the state for a full calendar year and intend to remain, is taxable federal income. Alaska has no state income tax, so there is no state layer on wages, RRSP withdrawals, or capital gains.

The RRSP

Untouched on departure, federally deferred under Article XVIII of the treaty, with no Alaska layer. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit.

Who makes this move

BC and Alberta oil and gas professionals to Anchorage's producer headquarters and the North Slope, Yukon and BC mining engineers to Alaska's mines, Canadian fisheries and marine professionals to the fishing industry, Canadian military-adjacent contractors to Fairbanks and Anchorage bases, and University of Alaska academics.

Worked example

A BC petroleum engineer moves to Anchorage on May 31 with $200,000 of unrealized gain in a non-registered account, $400,000 in an RRSP, and a Vancouver condo sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 53.5%: roughly $53,500.
• Condo. Sold as a resident under the principal residence exemption. No vacancy taxes.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Anchorage. No state income tax. Sales tax 12% becomes zero. Permanent Fund Dividend taxable federally from the second year.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"Our mission is to administer the permanent fund dividend program assuring that all eligible Alaskans receive timely dividends, fraud is prosecuted, and all internal and external stakeholders are treated with respect." — Alaska Department of Revenue, Permanent Fund Dividend Division, https://pfd.alaska.gov/

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

Alaska files are rotation files: a BC worker on a two-and-two North Slope schedule can meet the US substantial presence test without ever intending to move, and the treaty tie-breaker decides the year. We count the prior three years of days before anything else.

See also: Weighing Florida instead? See the Canada-to-Florida guide. Browse every corridor by city, province, and state.

Next step

Fairlight prepares the Canadian departure return, the first-year federal and state returns, and ongoing cross-border filings. See cross-border pricing or book a call.